Stock Market Update: Thursday, Oct. 22, 2020
Wall Street closed higher following solid economic news and positive signs over a deal on new coronavirus stimulus — and more in Thursday’s stock market update. House Speaker Nancy Pelosi, D-Calif., signaled once again that Democrats and the White House are making progress on negotiations. However, White House economic advisor Larry Kudlow said there are still significant hurdles.
Stock Market Update
The Russell 2000 rallied 1.7% following a late-day push to 1,631.
The Dow gained 0.5% after tapping an intraday high of 28,421.
The S&P 500 also rose 0.5% with the afternoon high reaching 3,460.
The Nasdaq added 0.2% with the morning peak hitting 11,548.
Energy and Financials lead sector strength after soaring 4.1% and 2%. Real Estate and Technology paced sector laggards with declines of 0.7% and 0.5%, respectively.
Stock Market Movers
MaxLinear Inc. (NYSE: MXL) rose 13% after reporting better-than-expected preliminary third-quarter revenue of $155-$157 million. Forecasts were at $126.12 million. The company also announced preliminary Q3 gross margin of 57%-59% and a tax rate of 6%.
Stock Market Outlook
Intel Corp. (Nasdaq: INTC) will announce earnings after Thursday’s close with Wall Street looking for $1.10 a share on revenue of $18.22 billion. In its last report, Intel guided for fiscal 2020 adjusted EPS of $4.85 on revenue of $75 billion. The company has topped estimates the past four quarters by 12, 17, 27 and 18 cents, respectively.
UPDATE: Intel cratered more than 10% after reporting profits fell more than 28% with a revenue dip of 4%, missing expectations by 7%.
Global Economy
European markets settled mixed following disappointing consumer confidence numbers.
UK’s FTSE 100 climbed 0.2% and the Belgium20 was up a point, or 0.03%.
The Stoxx 600, France’s CAC 40, and Germany’s DAX 30 dipped 0.1%.
German consumer confidence for November checked in at -3.1 points, down from 1.7 points in October. Meanwhile, a flash estimate from the European Commission showed eurozone consumer confidence falling 1.6 points in October to -15.5.
Asian markets closed mostly lower after the IMF downgraded its forecast for Asia-Pacific to -2.2% in 2020.
South Korea’s Kospi and Japan’s Nikkei fell 0.7%. China’s Shanghai declined 0.4% and Australia’s S&P/ASX 200 was off 0.3%. Hong Kong’s Hang Seng edged up 0.1%.
U.S. Economy
Initial Jobless Claims declined -55,000 to 787,000 after surging 75,000 to 842,000 last week. The four-week moving average fell to 811,250 from 832,750. Continuing claims posted another big -1,024,000 decline to 8,373,000 after plunging -1,197,000 to 9,397,000 previously.
Existing Home Sales surged 9.4% to 6,540,000 in September following a 2% increase to 5,980,000 in August. Strength was in the single-family sales index which jumped 9.7% to 5,870,000 after a 1.3% gain to 5,350,000 in August. Condo/co-op sales were up a solid 6.3% to 670,000 following the 8.6% climb to 630,000. The month’s supply of homes dropped further to 2.7 from 3, a new record low. The median sales price rose to $311,800, a fresh all-time peak, after increasing to $310,400 previously.
Leading Indicators index climbed 0.9% to 107.2 in September, versus forecasts for a rise of 0.7%, after jumping 1.4% to 106.5 in August. Five of the 10 components made positive contributions, led by jobless claims (0.47%) and building permits (0.15%). There were small declines in two categories, nondefense capital goods orders excluding aircraft (-0.04%) and stocks prices (-0.03%), while three components were unchanged.
Stock Market Sentiment
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) fell for the sixth straight session with the intraday and fresh monthly low tapping $156.97. Prior and upper support from early June at $157.50-$157 failed to hold. A close below the latter would suggest additional weakness towards $156-$155.50.
Lowered resistance is at $158-$158.50 followed by $159.50-$160 and the 200-day moving average.
Volatility Index
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was down for the second straight session after testing an afternoon low of 27.68. Current and upper support at 28-27.50 was breached but held. A close below the latter would signal another retest towards 26.50-26 and the 50-day moving average.
Resistance remains at 30.50-31 and the 200-day moving average.
Stock Market Analysis
The SPDR S&P 500 ETF (NYSEArca: SPY) was up for the second time in three sessions after trading to a high of $345.24. Lower resistance at $345-$345.50 was cleared but held. A close above the latter would indicate additional strength towards $346.50-$347.
Current support is at $342.50-$342 followed by $339.50-$339 and the 50-day moving average.
RSI is in a slight uptrend with lower resistance at 55-60 holding. A move above the latter would signal additional momentum towards 65-70 and prior levels throughout the first half of August. Support is at 50 and a level that has been holding since late September.
Sector
The Real Estate Select Sector SPDR Fund (NYSE: XLRE) was down for the fourth time in five sessions after trading to a midday low of $35.33. Current and upper support at $35.50-$35.25 was breached and failed to hold. A close below the latter reopens downside risk towards $35-$34.75 and the 200-day moving average.
Lowered resistance is at $35.75-$36 and the 50-day moving average.
Check back after the closing bell each day for the most important news and numbers in the WealthPress stock market update.